As an industry, HUD multifamily production has been down significantly in the last four years, largely due to increased interest rates and political policies. However, in Q1 2025 HUD-insured multifamily loan origination experienced a significant pick up. Though current market conditions are fitful, there is confidence the current administration will enact policies to bring HUD-insured programs back to strong historical levels.
Recently appointed Secretary of the Department of Housing and Urban Development, Scott Turner is determined to aggressively increase the national housing supply by removing unnecessary regulations that obstruct access to programs which assist developers.
Turner is resolute in his approach to maximize efficiency by enhancing and leveraging existing public/private programs that operate without the need for additional direct government funding. HUD-insured multifamily loan programs are a powerful strategic public-private partnership, providing unmatched leverage and competitive interest rates for multifamily development projects without requiring direct government funding.
The updated policies from the new administration carry over to multifamily new construction – the
nation needs more housing and HUD’s 221(d)(4) multifamily construction loan insurance program is a key solution for the government to provide support to developers without direct subsidy. Secretary Turner, who most recently sat in a developer role and leveraged this program, is expected to promote higher utilization rates.
The projected increase in new construction loan origination comes at the perfect time for multifamily housing, as deliveries are projected to slow significantly in coming years. Rolling four-quarter starts reached 13 million units in the fourth quarter of 2024, while permitting totaled 1.8 million units.
Taking a snapshot of the current market – peak supply, brought on by an onslaught of Covid-era new construction, has crested for many of the top 25 markets. By the halfway point of this year, 18 of the top 25 markets will have moved beyond their peak supply phase. As the supply of new construction wanes, new projects will be needed in these markets to meet supply in three to five years. HUD has extensive recent experience with financing new construction in 11 out of these 18 top markets.
HUD-insured financing provides the highest leverage non-recourse construction financing with fully amortizing 40-year permanent financing. The loans are fully assumable, and future streamlined interest rate reduction options are available once market conditions permit.
Finally, HUD provides financing solutions across all markets: primary, secondary, and tertiary. Post-closing, utilizing automated process and industry-leading technology, Berkadia’s construction loan experts help deliver an unmatched experience through the construction period.
Read more about top markets, regions and policy shifts impacting HUD in 2025 in our Beyond Insights Quarterly Market Update.
– Senior Managing Director Kevin Kozminske, Berkadia FHA/HUD